American Oil and Gas Reporter - January 2019 - 105

pages 104-109_Layout 1 1/10/2019 9:23 AM Page 105

ConventionSection: Independent Oil and Gas Association of West Virginia
Employees Insurance Agency (PEIA),
and to fund teacher pay raises, Burd
points out. But since the end of last
session, subsequent financial reports have
been promising, he reports.
"At the end of each quarter, our governor has been delighted to announce
that tax revenue is up and those revenues
indeed trace back to receipts from severance taxes," Burd says.
State revenue surges can be attributed
partially to millions pumped into the state
from pipeline construction, Loflin points
out. Although that also comes from the
oil and gas industry, it is also a temporary
source, he observes. "Once these pipelines
are built and that tax base moves on, the
state is not going to see the revenue it
does now," he acknowledges. "We need
to be careful and diligent in watching
our revenue and not spending money we
will not have in a couple years."
In fiscal 2018, the oil and gas industry
paid $138.8 million in severance taxes in
addition to $88.6 million in ad valorem
taxes, Burd reports, from production that
includes 1.6 trillion cubic feet of natural

gas statewide.
"That is more than $227 million,
which is quite an investment into our
state that doesn't even account for hundreds of millions of dollars in royalty
payments, nor does it include payrolls
or the industry's contribution to sales
taxes and such," he says.
New Law
IOGAWV continues to assess the impact of co-tenancy, which allows companies to drill on tracts in which 75 percent
of mineral owners agree to lease, even if
other parties decline to lease or cannot
be located, Burd says.
At the end of seven years, unclaimed
mineral revenues are split evenly between
PEIA and the state's abandoned well
fund, he notes. Under the law, surface
owners also have the right to reattach
unclaimed mineral rights to surface ownership rights, Burd reviews.
"We are only now really getting into
the meat of how West Virginia's new
co-tenancy statute, passed in March
2018, is helping producers amass more

NRG Safe is dedicated to safety in the oil and gas
industry. Our solar powered LED safety markers
are the preferred option when electricity is not
available on your location. These markers also aid
in darkened roadway illumination, lane delineation
and as a wrong way driver deterrent to create a
safer environment on high-traf c roads.

No Batteries
10 + Year Life
No Wires
Grid Independent
100% Waterproof
Multiple Color Options
3 Year Warranty

drilling units, and we hope legislators
will allow for ample time to explore
how that law greatly benefits the state
with increased drilling units and activity
before considering higher taxes or additional fees," he says.
In another initiative, IOGAWV is
urging lawmakers to support legislation
to raise the production threshold for the
marginal well severance tax exemption,
Loflin says, which is available only to
wells that produce less than 5 Mcf of
gas or half a barrel of oil a day. "We
want that exemption raised to align with
thresholds used by the federal government and some other states, which is
60 Mcf/d and 10 bbl/d, but we don't
want to eliminate the severance tax
completely," he explains. "We would
like to go from 5 percent down to 2.5
percent for a levy that goes into the
reclamation fund to plug orphaned wells.
We have issues with a lot of abandoned
wells, including some drilled around
the turn of the last century."
With unconventional gas from the
Marcellus accounting for more than 90

YHYS

YHDD

405.558.1295 * www.nrgsafe.com * sales@nrgsafe.com
JANUARY 2019 105
http://www.nrgsafe.com
American Oil and Gas Reporter - January 2019

Table of Contents for the Digital Edition of American Oil and Gas Reporter - January 2019
